David Ogolor and Leo Atakpu, Daily Independent
September 29, 2005

A 1986 report by a committee in the Federal
Ministry of Finance says most of the loans taken by both the state and
federal government between 1979 and 1983 were looted. The doctrine of
odious debts provides that “if a despotic power incurs a debt not for
the needs or in the interest of the state, but to strengthen its
despotic regime, to repress the population that fights against it,
etc., this debt is odious for the population of all the state”.

The Paris Club cannot expect that Nigeria, freed from over 30 years of
military rule to muster $12 billion to pay off interest and penalties
incurred by the military. Since the debt by President Obasanjo’s own
admission, are of dubious origin, the issues of the responsibilities of
the creditors must be put on the table during the discussions with the
Paris Club in September.

Jubilee South makes the case that it is the North that owes the South.
Jubilee South’s legitimacy stance derives from an analysis that
understands external debt as a manifestation and instrument of unjust
and unequal international economic and political relations.

The International Financial Institutions routinely use both the loans
they gave to poor countries and any debt relief they offer as tools to
force particular economic policies onto poor countries. Poor countries
are given debt relief only if they comply with conditions such as
privatizing public utilities and basic services, cutting public
spending, opening up markets and deregulating investment.

Apart from the harm that has been shown to result from these kinds of
externally imposed economic policy prescriptions, this practice takes
control over important political decisions away from governments,
elected parliaments and civil society, putting them instead in the
hands of unaccountable organisations, controlled largely by rich
country governments.

For a poor country as Nigeria spending $1 billion annually on debt
service and still in crisis to part with a whopping $12 billion will
mean a very serious shock. And to now tighten its noose with the
imposition of more reform programmes as will be contained in the Policy
Support Instrument (PSI) of the IMF is likely going to be catastrophic
for Nigeria’s poor, [estimated at more than] 90 million. Cancelling
debts without attaching further economic policy conditions is a
necessary part of putting an end to the illegitimate exercise of
control of the IFIs.

More often than not, debt cancellation is granted on condition of the
implementation of [a number of] detailed economic policies.

These have included, for instance, cuts in health and education
spending, trade liberalization and privatizations of government-run
industries. In the case of Nigeria, PSI is in the offing to intensify
these policies some of which are already contained in the National
Economic Empowerment and Development Strategy (NEEDS) document.

“As has been argued by a wide range of experts – including UN bodies
and indebted country governments as well as civil society – these
measures have not only slowed down debt relief, but have often harmed
recipient country economies. They have been more likely to protect the
assets and interests of creditors than promote growth,
poverty-reduction or stability.

They also undermine democracy in poor countries by denying elected
parliaments or civil society a say in important decisions about how the
country is run. We believe all debt should be cancelled without
economic policy conditions attached.

“However, it is critical that the money released from debt cancellation
be demonstrably used for poverty reduction. Recipient governments
(Nigeria in this case) should demonstrate to their own citizens that
they are spending money in a sensible and fair way,” says Jubilee Debt
Campaign, Action Aid UK and Christian Aid in a joint briefing paper.
But one way to guarantee the use of money released from debt
cancellation in poverty reduction programmes is the involvement of
parliamentary and civil society oversight in the monitoring and
tracking of the use of such money. This is yet to be guaranteed by the
President Obasanjo administration.

There is widespread fear that the proposed debt relief for Nigeria by
the Paris Club will [not] be enough to meet the Millennium Development
Goals.

Professor Jeffrey Sachs, Special Adviser to the UN Secretary-General on
Millennium Development Goals, on a visit to Abuja, described the
creditor countries as “callous” and condemned the debt deal. He said:
“The $18 billion debt cancellation for Nigeria is good but is less good
than it should be. The creditors are nasty and stingy. To extract $12
billion from a country with an annual budget of between $3 and $4
billion is callous.”

“Why would they be demanding so much from a country where children are
dying, millions are not in school and hunger and disease pervades?”
Professor Sachs queried. He added that, “they don’t need the money but
Nigeria needs it”.

As desirable as an exit from debt peonage is, it is scandalous for a
poor debt distressed country, which cannot afford to pay $2 billion in
annual debt service payments, to part with $6 billion up front or $12
billion in three months or even one year. The emission rate is simply
too high. Not even the Americans (United States) can afford it or will
do it, says Dr. Chu Okongwu in his reaction to the Paris Club deal for
Nigeria.

He said: “The international community – the Paris Club, the London
Club, the IMF and the World Bank particularly – well know that they
cannot get that kind of up front money from even richer countries like
Argentina, Brazil, India and Mexico.

Indeed, anybody, getting that kind of money up front should be prepared
to extinguish an aggregate debt stock of $36 billion without imposing
additional conditionality on the country.”

The British Commission for Africa explicitly called for Nigeria to be
included in wider and deeper debt relief, and recommended 100 per cent
write-offs to enable it to meet the UN Millennium Development Goals.
One-hundred per cent debt write-off for Nigeria is needed to meet the
MDGs given its poverty level and the fact that it receives $2 per head
a year in foreign aid, a figure lower than anywhere else in Africa
except Libya. Seventy-nine thousand, five-hundred Nigerian children die
before the age of five every month. Seventy per cent of Nigerians are
living on less than $1 a day, the World Bank says, and less than 60
percent of primary aged Nigerian children attend school. Nigeria’s oil
is worth only 50 cents a day per Nigerian.

Nigerian parliamentarians want some more action from the Paris Club and other creditors to enable it exit the debt trap.

The Honourable Farouk Lawan, Chairman of the House Committee on
Finance, said Nigeria should get 100 per cent debt cancellation. The
Senate Chief Whip Udo Udoma welcomed the Paris Club offer as a
“significant development for which all Nigerians must be deeply
appreciative,” but added that “the Paris Club should consider further
debt reduction to enable it to meet the MDGs.”

David Ogolor and Leo Atakpu run an NGO-Africa Network for Environmental and Economic Justice, based in Benin City.